Retail sales rose in June, the Commerce Department reported on Friday, an unexpected jump as American consumers increased their spending on restaurants, clothing and gadgets.
The value of all retail purchases rose 0.6% last month after declining 1.7% in May. Excluding automobiles, sales jumped 1.3% in June. The increase surprised Wall Street analysts, who were expecting a slight drop in sales last month.
Spending has slowed since March, when stimulus checks sent to most Americans prompted an increase in purchases. And as Americans get vaccinated, they are spending less on goods and more on hotels, hairstyles and other services, which is not reflected in Friday’s report.
âThis report captures only a small portion of consumer spending, restaurants and bars, but misses all travel,â she said.
âConsumers discriminate over what they spend,â said Gregory Daco, chief US economist at Oxford Economics. “They are avoiding goods that they consumed in abundance during the pandemic and return to goods that they did not have access to during the pandemic.”
Part of the increase last month could also be caused by rising prices, said Paul Ashworth, chief U.S. economist for consultancy Capital Economics.
Americans pay more for food, gas and other goods. Prices jumped last month from the highest in 13 years, the Labor Department said earlier this week. A Federal Reserve Bank of New York survey also found that consumers expect inflation to rise in the short term and over several years.
âYou are starting to see a pick-up in inflation expectations which could make consumers more cautious about opening their wallets when they spend,â said Beth Ann Bovino, chief US economist at S&P Global Ratings Services, before Friday’s post.
The Commerce Department said bar and restaurant sales were up 2.3% while clothing store sales were up 2.6% and 47.1% from a year ago. year. Sales in electronics stores increased 3.3% and 37.3% from June 2020.
Sales at non-store retailers, which include e-commerce, advanced 1.2% in June.
Receipts at gas stations climbed 2.5%. Retail sales figures are not adjusted for price changes, so sales reflect both cost and demand changes.
At car dealerships, sales fell 2%. Automakers don’t make as many vehicles, which means there are fewer cars to buy, due to a global shortage of chips, which are needed to power on-board displays and other technology.
The largest decline in sales was recorded at furniture stores, where purchases fell 3.6% in June. Sales also fell at home improvement stores and sporting goods stores.
As the start of the school year approaches, Bovino expects more parents, who could have relied on unemployment benefits and looked after their children while they turned to distance learning, to join the work market. This could help companies increase production and alleviate some of the supply and product shortages.
“I suspect we are going to see some of the supply constraints that businesses currently face ease in September,” she said.
Spending could also be affected by the early withdrawal of states from federal unemployment insurance programs, cutting the $ 300 per week of assistance that was added to benefits last year. Twenty-four states stopped paying extended benefits, most cutting aid in June, and a Bank of America analysis based on credit and debit card spending showed spending in states that did Ended benefits saw a drop in consumer spending last week.
States that withdrew the benefits argued that the aid discouraged people from looking for work at a time when some companies were trying to recruit staff as the economy reopened. Many economists argue that cutting benefits can end up hurting personal income more than it helps alleviate the labor shortage.
Bovino expects the child tax credit, which will provide all but the richest families with up to $ 300 per month per child as part of the pandemic relief program, a further increase consumer spending. The amount of the credit depends on the family’s income, the number of children and their age.
“It could help give a cushion to those people who are unemployed as they find a job,” Bovino said.
Information for this article was provided by Joseph Pisani of The Associated Press, Coral Murphy Marcos of the New York Times, and Olivia Rockeman of Bloomberg News (WPNS).